NB: A component of "The Arts of Communication," a course that I am taking at the Harvard Kennedy School, is maintaining a blog. Since I already have this one up and running, I will continue to post here for the remainder of the Spring. Comments are welcomed!
Industrializing economies have presented us with the twenty-first century’s most pervasive technological challenge. While frightening in its scope, the quest for scaleable, sustainable and cheap energy offers this generation’s greatest opportunity to create positive change across the human spectrum – provided that we act soon.
The lives of hundreds of millions of people have already been enhanced by globalization and economic growth. However, without novel approaches to distributing energy within emerging markets, the unprecedented increases in energy consumption required to sustain and expand human improvement could place the world in jeopardy.
To wit: India is the world’s second most populous country and fourth largest economy, yet produces only one-fifth as many CO2 emissions as the U.S. India’s low carbon production is positively correlated to its limited access to electricity. The World Bank estimates that half of India’s villages are still off-grid. Read another way, four hundred million Indians lack access to electricity, and rural electrification rates in the most populous states such as Bihar (10 percent) and Uttar Pradesh (18 percent) are considerably below the African average (21 percent). This means that any Indian effort to give poor people greater access to electricity will have to be matched by a strategy of slowing the growth of CO2 emissions. Without clean, efficient, and widespread electrification schemes, industrializing economic giants like China and India will drive global warming beyond our worst fears.
It is the pollution created by energy consumption that will worsen the economic wound, not energy use itself. This distinction, however simple, is not trivial. Technologies exist that can solve the pollution problem at a small fraction of current energy expenditures. When the externalities of pollution abatement are internalized, economic output will actually increase.
While industrialized economies are by no means perfect, more than a century’s head start has created some clear energy advantages. In the U.S., Europe, and other industrialized countries, by allowing multiple power plants to be interconnected over a wide area, electricity production costs are reduced and efficiency is boosted. However, in developing economies like India, such complex energy infrastructure rarely exists, and when it does, it is unreliable. As a consequence, 600 million Indians still cook using biomass (wood, manure, and grass).
Yet, the times are quickly changing. “Leapfrogging” – the process whereby industrializing economies avoid the resource-intensive pattern of development by skipping to the most advanced technologies available, rather than following the same path of conventional energy development forged by the industrialized economies – has been touted as the holy grail of emerging markets innovation. As the argument goes, cell phones leapfrogged landlines throughout much of the developing world, so why not apply the same technological leap in the energy space?
Leapfrogging energy technologies offers hope for an electrified, low-carbon world. But in order to work at scale and in time to avert the repercussions of manifold global carbon increases, two stipulations must be achieved.
First, energy leapfrogging must be done in a profit-driven, decentralized, off-grid way. Developing world governments are too clumsy, corrupt, and slow-moving to accomplish the drastic overhauls and upgrades required. Cosmos Ignite Innovations, a New Delhi-based firm founded by three Stanford MBAs, has distributed 10,000 waterproof, portable lamps that run on solar-powered batteries. The United Nations Development Program has awarded $18 million in small grants to communities operating small-scale renewable energy projects. Both organizations are seeking profit-driven, sustainable methods of reaching scale.
Second, as Kelly Sims Gallagher and her colleagues at the Energy Technology Innovation Project here at Harvard have pointed-out, industrializing countries’ governments must induce leapfrogging by increasing incentives and reducing barriers to entry. The leapfrog transition is possible at lower GDP per capita – $1,000 for developing economies today versus $5,000 for the United States in the nineteenth century (measured in 1997 dollars) – because modern energy forms are more abundant and the costs of energy are much lower than they were when today’s industrialized countries were making the transition. However, without local governments requiring firms to transfer cleaner technologies through more aggressive regulations, local firms cannot access the new and improved technology. Since local firms do not have their own capability to design the cleaner technologies, they fall even further behind foreigners. Their ever-increasing backwardness makes it even more difficult for the local government to risk imposing more stringent standards, and the downward spiral continues.
The twenty-first century is the perfect time to think big. We are living through a unique point in history where a mutual empathy inspired by easy travel and instantaneous communication has emboldened big thinkers to tackle global issues. As co-chair of the Social Enterprise In Action group at the Harvard Kennedy School, each day I am exposed to the amazing breadth and audacity of the social entrepreneurs who are crafting tomorrow’s solutions to today’s intractable problems. Industrializing governments can make entrepreneurs’ lives easier by improving regulations and lowering barriers to entry. With the right mix of innovation, incentives, and funding, we can overcome this century’s greatest challenge.
Nicholas Taranto is a concurrent MBA/MPA candidate at the Harvard Business School and Harvard Kennedy School.
